On Monday, the Salem City Council will vote to place a property tax levy on the May ballot which would cost the average Salem homeowner nearly $230 a year. If approved, it would help the city address a $14 million budget deficit and restore library hours which were cut last year. The levy would also fund parks maintenance, recreation programs such as youth camps, and classes and activities for seniors at Center 50+.
The vote will take place just two weeks after the abrupt resignation of city manager Keith Stahley. The Salem Reporter broke the news of Stahley’s resignation and the circumstances surrounding it after a performance audit released last month raised concerns about Stahley’s leadership and decision-making. Joe Siess covers local government for the Salem Reporter. He joins us to discuss the property tax levy and the controversy surrounding the city manager’s departure.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. The Salem City Council will vote next week to place a property tax levy on the May ballot. It would cost the average Salem homeowner an additional $230 a year, money that would help the city address its $14 million budget deficit. The vote will come at a time of heightened drama in the city, just a few weeks after the abrupt resignation of the city manager.
Joe Siess covers local government for the Salem Reporter. He joins us now. Welcome back to the show.
Joe Siess: Hi, Dave. Thanks for having me.
Miller: Yeah, I want to start with some recent history because the context here is pretty crucial. The city council called for an audit of the city manager’s office last year. Why?
Siess: Basically, the city of Salem for quite a while has had difficulty with public trust, and a lot of people just fundamentally do not trust their local government. I think a lot of that stems from the payroll tax fiasco a couple of years ago, but people just don’t trust the government to be good stewards of their tax dollars and the city is struggling to build that trust with the community. So one tactic that they came up with was to have these audits done and they’re going to do multiple audits on different departments over time, but they decided to start with the city manager’s office.
Miller: And what did that audit find?
Siess: So, basically, that audit found something that a lot of people already knew, that the city manager’s office is just terribly understaffed, and people are overworked and stressed – that includes the city manager who has had a lot of responsibility. And it found that his leadership struggled as a result of that, that he struggled to delegate properly and a lot of things got lost in the mix. It just found that he was struggling to maintain cohesion in the city manager’s office, and people were stressed and overworked.
Miller: There has been a lot of drama and some confusion around the resignation of the city manager, but the upshot is that he is now the former city manager. He stepped down. How significant is his departure?
Siess: Well, I think it’s pretty significant just given the fact that he was pretty integral to the budget process and he was due to present a budget to the city council in April, I believe. So with his abrupt departure, it leaves the city manager’s office without … I mean, there’s a new person stepping in. But the abrupt resignation left the city manager’s office without a leader, and just shakes things up at a really delicate time when the city needs to project unity, cohesion and that they’re moving forward in trying to build trust with the community. So yeah, I think it’s pretty significant and unexpected as far as I’m concerned, maybe other people expected it to happen.
Miller: Who is the current chief executive of the city?
Siess: So Krishna Namburi is the deputy city manager and she’s been with the city for a long time – I think 25 years if I’m not mistaken. She oversees a lot of different departments. They announced that she would be taking over, at least currently as the city manager.
Miller: What have you heard so far about her leadership from city leaders or staff?
Siess: I’ve heard that she’s very highly regarded and she has a lot of institutional knowledge. She’s been there for quite some time and I think people trust her quite a bit. I think people believe that she’s capable of doing this job. I’m not so sure she was hoping to be in this position at this time, but I think people hold her in high regard.
Miller: So this takes us to the tax levy that the city council is on track to put on the May ballot, with a vote just on Monday. Is there a connection between the city council’s desire to push out the city manager and its effort to put the tax levy on the ballot?
Siess: I guess the only connection would be that pushing the city manager out now just is a really delicate time to do that, because if they’re trying to build this trust with the community and ask voters to accept the property tax increase. A shakeup like this just abruptly and then all the speculation surrounding it is just not a good look. So I think the main connection is like, OK, so we’re trying to build trust, now we’re going to push the city manager out and that’s going to decrease trust, ultimately.
Miller: How much money would Salemites have to pay as a result of this property tax increase?
Siess: They’re likely going to put on the ballot a 98 cent property tax increase and it’s assessed by per $1,000 of assessed property value. So for the average homeowner, it would be like $230 a year. So yeah, that’s how much people could expect to pay if it does pass.
Miller: And what would that new money be spent on?
Siess: It would be spent on the library. There’s been an outpouring of support for the library, so that money would go towards restoring service hours. I think it would bring the main library from 38 to 48 hours a week and the money would also go towards parks maintenance and Center 50+ programming. So those three main categories the money would go towards.
Miller: What would the levy mean for other city services?
Siess: If it does get passed, the first year it would generate like $14 million. The city is in a $14 million budget deficit, so they’re expecting to have to cut a lot of stuff. So if they get the levy passed, then they use it to pay for those three: the library, 50 +, recreation. That will free up some other funding in the general fund, and they can avoid cuts to, for example, police and fire, which are obviously very important to a lot of people. So basically, the levy would allow them to avoid making cuts in other areas that people would definitely feel, eventually.
Miller: Can you tell us about the City Efficiency Committee, which recently looked into the city’s finances?
Siess: Sure. Basically, this committee was formed … the Chamber of Commerce and the Homebuilders Association suggested it and the city worked with them to put together this nine-person City Efficiency Committee. They were all local executives who have experience with multi-million dollar budgets like at big organizations. There’s some people in the private sector, the public sector, the nonprofit sector and whatnot. And they all got together, and they did a pretty high level look at the city’s budget, and just tried to give them some pointers on how they could save.
What they found is [that] the city is already extremely efficient as it is. They compared it to some peer cities. Like Eugene, for example, the city is doing more with less. And one of their main conclusions, at least in my mind, is that there’s no way for them to efficiently find their way out of the situation that they’re in. Their budgetary woes are primarily due to factors that are completely out of Salem’s control – for example, PERS rates, retirement benefit rates that they do not control. The state controls how much they have to pay for that. Also, property taxes that were frozen by Measures 5 and 50 back in the ‘90s, so they can’t really shore up the revenue that they need.
So these are structural issues. And this committee pointed that out and stressed the importance of communicating that to the public … is basically that in a nutshell.
Miller: My recollection of the payroll tax debate was that members of the business community basically said, we don’t trust you city council. City leaders, you’re telling us there are these structural issues with the budget. We think you can find efficiencies. Is it too simplistic to say that, now, various business leaders looked into it and they came to the same conclusion that city officials have been saying for years?
Siess: Oh, yeah. I think that their conclusions really provided the seal of approval, I guess, from the business community, to be like, “yes, this is what’s happening.” This is out of their control and the chair of the committee. Brian Moore, I liked how he said it. He said it was “like bringing a knife to an artillery battle,” basically trying to find efficiencies in this situation is just not really feasible. Obviously, there might be opportunities for some efficiency, but he was like, that’s just not going to do much in the long run.
Miller: I talked to Mayor Julie Hoy last May after she’d won her election. And what I most remember from that conversation was that she didn’t seem to agree with the proposition that the city faced a serious budget crisis, or at least she wasn’t ready to say that. And she basically said that maybe the issue was that there were inefficiencies and financial mismanagement, and if she looked carefully enough under the sofa cushions, everything would be fine. Has she changed her tune?
Siess: I do recall her saying in a recent council meeting that at least part of the deficit is definitely real, which was in my mind a shift in the way she projected herself publicly at least. To be honest, she hasn’t said a whole lot publicly about how she feels on these matters. But I do think that now that she is mayor, she’s starting to see “under the hood,” so to speak, what’s happening. I think she might be changing her tune, like you said.
Miller: Didn’t she also campaign on not raising taxes?
Siess: If I recall, she did. And I’m referring to Mayor Hoy’s website here. It says one of her priorities is to oppose unnecessary taxes and fees. So you’re correct on that.
Miller: Oh, but I guess in voting to put this forward to voters, it turns out she does believe that this is not an unnecessary increase in taxes but a necessary one.
Siess: I think that is a reasonable assumption that perhaps she sees this in a different light now and that this is perhaps a necessary way to help bridge that $14 million budgetary deficit.
Miller: Meanwhile, as we’ve been talking around, Salem voters said “no” to a payroll tax just a few years ago by a huge amount. I think like 80% of voters said “no” to it. Do you have a sense where Salem voters might be on this new ask?
Siess: Well, I think it’s really anybody’s guess. I do know that a lot of people have supported this levy because they do not want to see their library get cut. They do not want to see Center 50+ get cut. They want these services and they don’t want to see police and fire being cut. So a lot of people do support it, but there’s also a whole bunch of people who are just fed up with paying taxes. People just can’t afford it, people don’t want more taxes, which is perfectly understandable. And people also don’t trust their local government to do the right thing with their tax dollars, despite audits, committees and stuff. So it’s anybody’s guess. And I think to answer your question, it’s just a wait and see kind of situation.
Miller: Meanwhile, before I say goodbye, I just want to turn back to that audit you mentioned. [It] found both problems with the management of the city manager, but also just that the city was simply understaffed and that understaffing was leading to other problems. Is there a likely scenario now in which staffing gets better?
Siess: That is a very good question. I honestly don’t know if I can answer it. I do know that morale is perhaps pretty low right now in the city manager’s office. Hopefully that’ll change with Krishna coming on and leading the city manager’s office in a different direction perhaps. It’s unclear what exactly will happen. But I don’t know how this will affect their ability to staff up or lighten the load for their overworked staff at this moment
Miller: Joe, thanks very much.
Siess: Thanks, Dave.
Miller: Joe Siess covers local government for the Salem Reporter.
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